Beth Thibodeaux, CEO, and Ben Fagnant, Operations Manager of drilling contractor Payzone Directional Services, Inc., discuss starting small, creating success, and riding the ups and downs of the drilling industry.
Ben Fagnant remembers that when Payzone Directional Services started out in 2006, it started very small – based on the number of MWD (Measurement While Drilling) kits it had. Payzone started with just one, adding more as time went by and clients came through the door, until it was as a buzzing company with a wealth of clients, kits and inventory.
For those not in the know, Fagnant explains that drilling contractors use MWD kits for survey data, measurements, and so on. You can tell a lot about a company by how many it has: the more the better. Each costs between $250,000 and $500,000.
Newly installed CEO Beth Thibodeaux points out that the company’s current main operations are not focused only on MWD systems but also directional drilling, personnel, and well drilling.
Fagnant recalls that 2014 was a peak for the business before prices fell – and the numbers of drilling rigs soon after – with the oil and gas industry taking a big hit. He estimates the industry had about 2000 rigs in operation before the plummet, with the ensuing bust leveling that count to around 400, wiping out about 75 percent of total resources. Payzone – although recovering well from this difficult period that affected all oil and gas companies – holds enough kits but still needs additional rigs.
Dealing with the drop
With this industry-wide setback in mind, Fagnant explains that Payzone’s appeal to customers is its reputation as a boutique “company next door” with a family-oriented feel. Clients know they can contact the company at any time and reach someone who is familiar with their project, and who wants both company and client to excel in every regard.
The majors, as Fagnant refers to the biggest companies in the drilling sector, simply don’t offer the same level of customer service and flexibility that slim and trim Payzone can provide, and customers can sometimes get “lost in the machine” as a result.
Thanks to Payzone’s approach, there is a great deal of loyalty from its customer base, who are responsive to its high quality of customer service. Speaking further on flexibility, Fagnant admits that a lot of kits on the market currently are from the majors as it can take millions of dollars to develop them on a large scale; to counter this, Payzone is free to get whatever it needs, to meet its customer’s needs and fit its application, from other suppliers, thanks to its relationships, flexibility and agility as a smaller business.
Fagnant believes that “being flexible and dynamic is what differentiates [Payzone]” in the market, with Beth Thibodeaux adding that the company “does not see [its] clients as a number or a dollar sign”, but as people first. The company has become adept at providing a one-on-one experience, and ensuring the customer feels attended to and not lost in the shuffle, as they may be with a larger business.
Meeting every need
Fagnant makes the point that Payzone’s services (as with the services of any business in the oil and gas industry) are by necessity expensive. Of course, he says, that means that operators expect to be well taken care of and feel that their every need and request is being met. But in a fraught, competitive field, the company holds its own, doing everything it can, including to “bend over backwards and accommodate these requests.”
Operators who are clients of Payzone in turn have offered a lot of positive feedback for this approach to customer service, where they especially appreciate the convenience of the company’s availability.
Thibodeaux explains that Payzone provides a service which includes many different types of equipment, a lot of which comes from its third-party vendors and suppliers, so cohesive relationships with these businesses are crucial to the company. The company keeps tabs on all vendors, actual and potential, and on the best and latest technology in the field, so that it’s always available to Payzone’s customers.
Keeping these business relationships with suppliers in top shape allows Payzone to have ready access to the kind of tools regularly required (such as MWD kits and mud motors) – indeed, the company’s success hinges on that – as well as “being respectful and paying bills on time,” Fagnant says.
Another aspect of the company that’s crucial, both internally and to its customers, is its safety record. Fagnant notes that the number one goal for any company is to send employees out to a job with full confidence in their safety and security, especially when working in an industry replete with rigs and powerful, heavy equipment.
Equipment performance is measured by MTBF (Mean Time Between Failures), with Fagnant placing Payzone’s MTBF at around 2500 hours, meaning that tools are expected to run for that many drilling hours failure free, a remarkable statistic within the industry. Whether directed at its customers, partners, or inwardly, the company’s experience, focus, and hard work continue to reap rewards.
Payzone has seen its fair share of hardships throughout the years (as evidenced by the trickle-down effect of the industry’s recent economic slump), and still contends with many challenging aspects of the drilling industry. Fagnant notes that the drop in oil prices and rig counts currently affects the entire sector; although since hitting its floor in 2016, the rig count around the country has climbed back to just under 1000, which is still only half the number in use five years ago.
Staying in the hunt
This environment has also bred fierce competition, with operators having to drop prices to stay in the hunt, including Payzone, which has seen slimmer margins. By not using its own tools on projects, Fagnant notes, the company must use what is available on the market in the way of rented equipment.
Fagnant believes that the company’s pricing could be more competitive if the company owned its own systems, a goal to aspire to as the market begins to work its way back up. Therefore, a lot of attention is paid to Payzone’s model of customer acquisition, focusing on what it can offer the marketplace and excel in, rather than on any shortcomings.
Though Beth Thibodeaux has only been with Payzone since June 1, 2019 (just over one month as of this writing), her intention is to hit the ground running with an emphasis on re-examining the goals the company sets for itself. Thibodeaux mentions that the company’s operations have traditionally focused on the Rocky Mountain region, where it is well-known and respected; now, the focus moves to diversification into other markets, in terms of both location and clientele.
Making it personal
Not a big box company, Payzone is more a tight-knit outfit that regards its relationships with clients as both highly important and personal, with the goal of cultivating relationships that are close and trusting. It’s vital that customers get a quality product at a fair price and genuinely enjoy their partnership with Payzone.
Thibodeaux feels this will continue to be achieved through open communication both at the executive level and on the front lines with rig personnel. Although taking the helm so recently, she will shortly be meeting with client executives in Houston, Denver, and Dallas to promote the company’s services to rigs in the field.
Payzone Directional continues to make the best of a rocky situation in the drilling industry, and the company remains confident that its approach to operations and customer service separate it from the pack and bolster its plans for growth and a prosperous future.